9 Large scale operations : In international business, all the operations are conducted on a very huge scale. Production and marketing activities are conducted on a large scale. It first sells its goods in the local market. Then the surplus goods are exported.Intergration of economies : International business integrates (combines) the economies of many countries. This is because it uses finance from one country, labour from another country, and infrastructure from another country. It designs the product in one country, produces its parts in many different countries and assembles the product in another country. It sells the product in many countries, i.e. in the international market.

10 Dominated by developed countries and MNCs : International business is dominated by developed countries and their multinational corporations (MNCs). At present, MNCs from USA, Europe and Japan dominate (fully control) foreign trade. This is because they have large financial and other resources. They also have the best technology and research and development (R & D). They have highly skilled employees and managers because they give very high salaries and other benefits. Therefore, they produce good quality goods and services at low prices. This helps them to capture and dominate the world market.Benefits to participating countries : International business gives benefits to all participating countries. However, the developed (rich) countries get the maximum benefits. The developing (poor) countries also get benefits. They get foreign capital and technology. They get rapid industrial development. They get more employment opportunities. All this results in economic development of the developing countries. Therefore, developing countries open up their economies through liberal economic policies.

11 Keen competition : International business has to face keen (too much) competition in the world market. The competition is between unequal partners i.e. developed and developing countries. In this keen competition, developed countries and their MNCs are in a favourable position because they produce superior quality goods and services at very low prices. Developed countries also have many contacts in the world market. So, developing countries find it very difficult to face competition from developed countries.Special role of science and technology : International business gives a lot of importance to science and technology. Science and Technology (S & T) help the business to have large-scale production. Developed countries use high technologies. Therefore, they dominate global business. International business helps them to transfer such top high-end technologies to the developing countries.

12 International restrictions : International business faces many restrictions on the inflow and outflow of capital, technology and goods. Many governments do not allow international businesses to enter their countries. They have many trade blocks, tariff barriers, foreign exchange restrictions, etc. All this is harmful to international business.Sensitive nature : The international business is very sensitive in nature. Any changes in the economic policies, technology, political environment, etc. has a huge impact on it. Therefore, international business must conduct m to find out and study these changes. They must adjust their business activities and adapt accordingly to survive changes.

14 Earn foreign exchange : International business exports its goods and services all over the world. This helps to earn valuable foreign exchange. This foreign exchange is used to pay for imports. Foreign exchange helps to make the business more profitable and to strengthen the economy of its country.Optimum utilisation of resources : International business makes optimum utilisation of resources. This is because it produces goods on a very large scale for the international market. International business utilises resources from all over the world. It uses the finance and technology of rich countries and the raw materials and labour of the poor countries.

15 Achieve its objectives : International business achieves its objectives easily and quickly. The main objective of an international business is to earn high profits. This objective is achieved easily. This it because it uses the best technology. It has the best employees and managers. It produces high-quality goods. It sells these goods all over the world. All this results in high profits for the international business.To spread business risks : International business spreads its business risk. This is because it does business all over the world. So, a loss in one country can be balanced by a profit in another country. The surplus goods in one country can be exported to another country. The surplus resources can also be transferred to other countries. All this helps to minimise the business risks.

16 Improve organisation's efficiency : International business has very high organisation efficiency. This is because without efficiency, they will not be able to face the competition in the international market. So, they use all the modern management techniques to improve their efficiency. They hire the most qualified and experienced employees and managers. These people are trained regularly. They are highly motivated with very high salaries and other benefits such as international transfers, promotions, etc. All this results in high organisational efficiency, i.e. low costs and high returns.Get benefits from Government : International business brings a lot of foreign exchange for the country. Therefore, it gets many benefits, facilities and concessions from the government. It gets many financial and tax benefits from the government

17 Expand and diversify : International business can expand and diversify its activities. This is because it earns very high profits. It also gets financial help from the government.Increase competitive capacity : International business produces high-quality goods at low cost. It spends a lot of money on advertising all over the world. It uses superior technology, management techniques, marketing techniques, etc. All this makes it more competitive. So, it can fight competition from foreign companies.

20 International Business Operations and InfluencesMeans(Types of International Business)OperationalMerchandiseExports and ImportsVisible exports and importsMajor sources of international revenue and expenditure for most countriesThe first type of foreign operations of a firmLeast commitment and least risk of a firm’s resources

21 International Business Operations and InfluencesMeans(Types of International Business)OperationalService Exports and Importsinvisible exports and imports: many typestravel, tourism, transportationimportance revenue for int. airlines, shipping companies, reservation agencies, and hotels.performance of activities abroadBanking, insurance, rentals, engineering, managementturn-key operationsManagement contractsuse of assets from abroadRoyaltiesLicensing agreementsFranchisingAfter successfully building exports to a marketGreater international commitment

22 International Business Operations and InfluencesMeans(Types of International Business)OperationalInvestmentsDirect investmentsControl follows the investmentHigh commitment of capital, personal, technologyGain of foreign resourcesHigher foreign sales than exporting (often)Partial ownership (sometimes)Portfolio investmentsDebt or equityNon-control of foreign operationFinancial purposes, e.g. loansMove funds to get a higher yield on short-termBorrow funds in different countries

23 International Business Operations and InfluencesMeans(Types of International Business)FunctionalMultinational EnterpriseWorldwide approach to markets and productionAlso known as MNC or TNCUsually involved in nearly every type of international business practiceintegrated global philosophy: domestic and overseas operationsdefinition: production facilities, sizeTwo categories of MNE:The Global Company: operations from different countriesThe Multidomestic Company: each country’s operations to be independent.

24 International Business Operations and InfluencesThe External EnvironmentDrawing on Other DisciplinesOperations in the worldwide environmentaffected by social science disciplinesCover all functional fieldsGeographylocation, quantity and quality of the world’s resources and their availability for exploitationHistoryA systematic recording of the evaluation of ideas and institutionsLooking at the past gives a clearer understanding of international business activities in the presentThe accumulation of human experience

25 International Business Operations and InfluencesThe External EnvironmentDrawing on Other DisciplinesPoliticsPlay important role in shaping worldwide businessRelationship between business and national political organizationsBehavior patterns of governments and business firmsPolitical leadership controls international businessLawdomestic and international law determine international business can and cannot doDomestic law in home and host countriesTaxation, employment, foreign exchange transactionsEconomicsThe impacts of international business on the economy of home and host countries, and vice versa.Anthropologyunderstanding the values, attitudes, and beliefs of the society

26 International Business Operations and InfluencesThe Competitive EnvironmentTrends Affecting the Nature of International CompetitionTime and Space ShrinkageTechnology and Geographic ExpansionInstitutional DevelopmentsDevelopment of Global Competition

28 Unidroit Principles Kontrak InternasionalThe international character of a contract may be defined in a great variety of ways.The solutions adopted in both national and international legislation range from a reference to the place of business or habitual residence of the parties in different countries to the adoption of more general criteria such as the contract having “significant connections with more than one State”, “involving a choice between the laws of different States”, or “affecting the interests of international trade”.Ciri internasional dari suatu kontrak dapat didefinisikan dengan banyak cara.Solusi yang diambil baik dalam legislasi nasional maupun internasional bervariasi mulai dari yang mengacu kepada tempat kedudukan bisnis atau tempat tinggal para pihak di negara-negara yang berbeda sampai yang mengacu kepada kriteria-kriteria yang lebih umum seperti kontrak memiliki “hubungan yang signifikan dengan lebih dari satu negara”, “melibatkan pilihan hukum dari negara-negara yang berbeda,” atau “mempengaruhi kepentingan-kepentingan perdagangan internasional.”

32 Prinsip-prinsip Kontrak Bisnis Internasional (Unidroit Principles)(Freedom of contract)The parties are free to enter into a contractand to determine its content.(No form required)Nothing in these Principles requires acontract to be concluded in or evidenced by writing.It may be proved by any means, including witnesses.

33 (Binding character of contract)A contract validly entered into is binding upon the parties.It can only be modified or terminated in accordance with its terms or by agreement or as otherwise provided in these Principles.

34 (Mandatory rules)Nothing in these Principles shall restrict the application of mandatory rules, whether of national, international or supranational origin,which are applicable in accordance with the relevant rules of private international law.Interpretation and supplementation of the Principles)(1) In the interpretation of these Principles, regard is to be had to their international character and to their purposes including the need to promote uniformity in their application.(2) Issues within the scope of these Principles but not expressly settled by them are as far as possible to be settled in accordance with their underlying general principles.

35 (Good faith and fair dealing)(1) Each party must act in accordance with good faith and fair dealing in international trade.(2) The parties may not exclude or limit this duty.(Usages and practices)(1) The parties are bound by any usage to which they have agreed and by any practices which they have established between themselves.(2) The parties are bound by a usage that is widely known to and regularly observed in international trade by parties in the particular trade concerned except where the application of such a usage would be unreasonable.

36 (Notice)(1) Where notice is required it may be given by any means appropriate to the circumstances.(2) A notice is effective when it reaches the person to whom it is given.(3) For the purpose of paragraph (2) a notice “reaches” a person when given to that person orally or delivered at that person’s place of business or mailing address.(4) For the purpose of this article “notice” includes a declaration, demand, request or any other communication of intention.

37 “court” includes an arbitral tribunal; (Definitions)In these Principles:“court” includes an arbitral tribunal;where a party has more than one place of business the relevant “place of business” is thatwhich has the closest relationship to the contractand its performance, having regard to thecircumstances known to or contemplated by theparties at any time before or at the conclusion ofthe contract;“obligor” refers to the party who is toperform an obligation and “obligee” refers to the party who is entitled to performance of thatobligation.“writing” means any mode ofcommunication that preserves a record of the infor-mation contained therein and is capable of being reproduced in tangible form.

41 PREAMBLEPart I. Sphere of application and general provisionsCHAPTER I. SPHERE OF APPLICATIONCHAPTER II. GENERAL PROVISIONSPart II. Formation of the contractPart III. Sale of goodsCHAPTER I. GENERAL PROVISIONSCHAPTER II. OBLIGATIONS OF THE SELLERSection I. Delivery of the goods and handing over of documentsSection II. Conformity of the goods and third party claimsSection III. Remedies for breach of contract by the sellerCHAPTER III. OBLIGATIONS OF THE BUYERSection I. Payment of the priceSection II. Taking deliverySection III. Remedies for breach of contract by the buyerCHAPTER IV. PASSING OF RISK

42 CHAPTER V. PROVISIONS COMMON TO THE OBLIGATIONS OF THE SELLER AND OF THE BUYERSection I. Anticipatory breach and instalment contractsSection II. DamagesSection III. InterestSection IV. ExemptionsSection V. Effects of avoidanceSection VI. Preservation of the goodsPart IV. Final provisions

43 EXPLANATORY NOTE BY THE UNCITRAL SECRETARIAT ON THE UNITED NATIONS CONVENTION ON CONTRACTS FOR THE INTERNATIONAL SALE OF GOODSPREAMBLEPart One. Scope of application and general provisionsScope of applicationParty autonomyInterpretation of the ConventionInterpretation of the contract; usagesForm of the contractPart Two. Formation of the contractPart Three. Sale of goodsA. Obligations of the sellerObligations of the buyerRemedies for breach of contractPassing of riskSuspension of performance and anticipatory breachExemption from liability to pay damagesPreservation of the goodsPart Four. Final clauses

44 International Institute for the Unification of Private Law UNIDROITInternational Institute for the Unification of Private LawPRINCIPLES OF INTERNATIONAL COMMERCIAL CONTRACTS 1994These Principles set forth general rules for international commercial contracts.They shall be applied when the parties have agreed that their contract be governed by them.They may be applied when the parties have agreed that their contract be governed by “general principles of law”, the “lex mercatoria” or the like.They may provide a solution to an issue raised when it proves impossible to establish the relevant rule of the applicable law.They may be used to interpret or supplement international uniform law instruments.They may serve as a model for national and international legislators.